Noranda benefits from pricier metals

Higher realized prices for its bread-and-butter metals offset lower production and propelled Noranda (nrd-t) to a profit of US$153 million for the first quarter.

The earnings, which represent US49 per diluted share, are a vast improvement over the year-earlier loss of US$40 million, or 18 per share. The recent quarter also saw revenue jump 57%, to US$1.65 billion, while cash flow from operations climbed six-fold to US$358 million.

The loss in the first three months of 2003 includes a US$19-million after-tax restructuring charge and reflects the effects of the strike at the Horne smelter in Rouyn-Noranda, Que.

The latest quarter was hampered by a 3-week strike at the Sudbury nickel operations.

Driven by Chinese demand, Noranda’s average realized price for copper was 54% higher than in the first quarter of 2003; nickel was up 80% to $6.88 per lb.; zinc, up 29% to US53 per lb.; aluminum, up 16% at US79 per lb.; and lead, up 71% to US41 per lb.

The volumes of metal mined were as follows: 99,614 tonnes copper (versus 113,897 tonnes in the first quarter of 2003); 145,059 tonnes zinc (143,394 tonnes); 11,072 tonnes nickel (12,961 tonnes); 7,999 tonnes ferronickel (6,887 tonnes); 20,287 tonnes lead (18,425 tonnes); and 3.6 million oz. silver (3.1 million oz.).

Refined production amounted to 143,508 tonnes copper (109,954 tonnes a year earlier); 28,458 tonnes zinc (37,9.35 tonnes); and 26,858 tonnes nickel (27,450 tonnes).

Operating income from the copper business climbed nearly six-fold to US$139 million; cash costs were US25 per lb. Noranda expects copper production to climb 20% to 440,000 tonnes in 2004 as the Collahuasi expansion in Chile and the Kidd Mine D project in Ontario come on-stream.

Despite the Sudbury strike, the nickel business contributed US$187 million to earnings — nearly three times more than in the first quarter of 2003. The Integrated Nickel Operations (the Sudbury operations, the Raglan mine in Quebec and the Nikkelverk refinery in Norway) and the Falcondo facilities in the Dominican Republic returned cash operating costs of US$2.60 per lb. nickel and US$2.95 per lb. nickel, respectively (Noranda owns 59.5% of Falconbridge). INO is expected to churn out 47,000 tonnes of mined nickel in 2004; Ferronickel production from Falcondo is pegged at 28,000 tonnes; refined nickel from Nikkelverk, at 72,000 tonnes.

The company’s zinc business turned a year-ago loss of US$121 million into income of US$2 million; cash costs were US33 per lb. Zinc metal production for 2004 is estimated at 370,000 tonnes.

At the end of the first quarter, Noranda had cash and equivalents totalling US$737 million, up US$107 million from the end of 2003. Total debt was relatively unchanged at US$3.3 billion.